man and woman discussing disadvantages of budgeting

5 Disadvantages of Budgeting You Want to Know About and What to Do

There are two types of people in this world.

Ones that budget and the other ones that don’t.

People that budget prefers knowing they have money even if they need to wait months or years to enjoy it.

People that don’t budget enjoy living life in the moment and see no reason to save (or save as much).

There is no doubt that budgeting is a valuable tool.

But either we do budget, or we don’t have a budget, or we kind of sort of budget (there is a budget written down, but we never stick to it)!

Budgeting is one of the foundations to becoming Financially Independent (FI).

However, there are disadvantages to budgeting.

Let’s talk about the disadvantages of budgeting.

What is a budget? 

Person budgeting since she understands the disadvantages of not budgeting

A budget is a financial plan that helps you keep track of the money coming in and going out.  

It is a financial tool that:

  • Tells your money where to go
  • Helps you meet your financial goals
  • Helps you pay off your past financial mistakes
  • Allows you to save for your financial future

What are the 5 disadvantages of budgeting?

woman frustrated because she doesn't understand the disadvantages of budgeting

1. Requires time and tedious effort

It takes a lot of time and effort to figure out a realistic budget and maintain it.

Keeping up a budget is time-consuming.  

The first budget you write out for your family will not accurately represent what your expenses are.

You need to track expenses for at least three months to see the average expenses for groceries, eating out, gas, etc.

Naturally, some months are more costly than others.

Budgeting is a tedious effort.

You need to remember to link your cards to the app and ensure the expenses are under the correct category.

If you are inputting the information manually, you need to take the time to do it. 

At the end of the week, if you haven’t kept up with your budget daily, it could take 30min to an hour to update the budget.

This includes writing in all the expenses, putting it in the right category, and doing the math (if you are doing it pen and paper style).

2. Limiting and restrictive 

Person putting coin into piggy bank

Budgeting limits and restricts our behaviors. And because of that, we can tend to drop the budget sooner than later. 

Did you have to say no to going out with friends because it’s not in the budget? 

Did you ever have to tell yourself no to a cup of coffee because you didn’t budget for it?

Even though something as tiny as $5 can improve your mood at that moment. 

Your quality of life is tremendously impacted if you constantly tell yourself no.

Especially to little things that make you happy.

Low quality of life because of a budget is not sustainable.

3. Inaccurate

woman frustrated because she understands the disadvantages of budgeting and trying to do better

Budgets are a guessing game, and they can be inaccurate.

Monthly expenses are not always the same each month.  

No matter how good you are at budgeting, miscellaneous expenses and events come up that you haven’t planned for.

You can not say no to these things, so you have no choice but to go over your budget.  

People with varying incomes (freelancers or entrepreneurs) have difficulty building a budget based on the unknown.

4. Stressful

mom frustrated due to the disadvantages of budgeting

It is stressful to always live according to a budget!

Kids have an unexpected party to attend, and you need to buy a gift.

However, you are already maxed out on your gift expenses for the month because you already had 3 other parties!  


You have to buy extra uniforms because you hate washing their clothes every day.

The uniforms get really dirty, and you can not reuse them. Your clothing budget is now over budget. 


Your husband, who never asks for anything and never buys anything for himself, all of a sudden says he needs new summer shorts.

You don’t have the heart to tell him you’ve already spent the clothing money on the kid’s uniform, so you buy the shorts anyway. 


These are things that you just can’t predict.

They go under miscellaneous, and suddenly, you are spending an extra $500/month on various expenses.

At the end of the month, the income and expenses numbers do not even out, and you overspent.

5. Not using the correct type of budget 

calculator and empower notebook

Did you know there are many ways to budget?

You could have been budgeting the wrong way in the past, so that’s why it has never worked out.  

This is the most significant disadvantage of budgeting that people often overlook.

Not using the correct type of budget that works for you and your family will cause you to overspend and abandon the budget altogether. 

Most of all, it will cause stress.

And then you tell yourself that you don’t really need to budget, and you just spend aimlessly.  

What is the purpose of budgeting?

hands counting money

The purpose of a budget is to increase your financial wellness.

Budgeting gets easier through:

  • Strategic planning
  • Establishing excellent and healthy money habits
  • Tracking your expenses

Eventually, it becomes effortless and will ultimately improve your overall financial health.

Related Post: Purpose of Budgeting and How to Use It to Your Advantage

What are the different ways to budget?  

person giving presentation on the disadvantages of budgeting

Here’s the interesting part!

Find the right way to budget for you, and the disadvantages of budgeting will no longer be a disadvantage.  

Here are four ways to budget:

Cash envelope system

cash envelope system

This system requires you to use cash with every expense.

At the beginning of the month, you set a budget for each category (i.e., grocery or gas).

Then you fill that category with the allotted cash.

Once it’s gone, you don’t spend any more money in that category.  

No need to track every purchase
Rigid system with no flexibility 
Good for people who need help reducing unnecessary spending
Inconvenient to always have cash on you 
Easier to save money because you can’t overspend if the cash is already goneCan’t use credit card points to accumulate free money

Zero-based budgeting 

This system has you assigning every dollar a name.

You allocate a goal to each dollar until you have zero dollars left to spend.  

Works if you are a detailed perfectionist 
Tedious work and time consuming
Stringent budget so you maximize each dollar you haveMust be committed since it requires a lot of maintenance
Clearly know where every dollar is going because you are monitoring itHard to predict each and every expense each month, so you may go over the budget
Can clearly identify areas of essential spending and areas of wasteful spending 

50/30/20 budget system

person calculating the budget

This system will split your income into three categories: 

  • 50% to necessities
  • 30% to wants
  • 20% to savings and debt repayment

You spend on things you need now to cover living costs, save for the future while giving yourself permission to buy things you want, and pay down debt.

Low maintenance since there are only three categories
Prioritizing needs vs. wants can be difficult 
More likely to stick to it long term since you are not depriving yourself of things that you wantDoes not prioritize debt and aggressively paying it down 
Not putting enough away for your future self (20% is not enough to become FI)

Pay yourself first system 

This system is the “reverse” budget or what anti-budgeters like to do.

Essentially, you are paying yourself first before anything else.

You immediately put money away in this order:

1) Savings/investing goals (such as retirement)

2) Pay for your bills (such as living expenses and food) 

3) Spend the rest of the money however you wish

Flexible and low maintenance
Lack of structure 

No need to record every expense
Sloppy since you don’t know exactly know how much you are spending on things 
Prioritize savings/investing over paying off debt Not for people who need control of their money first or who are in debt and need to pay off debt first
Easy to set up automation to ensure you get paid first
Spending aligns with your values because you have less money to spend

What are some free budgeting tools?

money and phone used to understand the disadvantages of budgeting


It’s one of the most popular free budgeting tools.

You enter your basic information, link your banks, credit card accounts, and investments accounts, and it can start tracking your money for you.

It goes in the default categories, which you need to monitor to ensure it is in the right area.

Google Sheets

They offer free budget templates to users, and you can tailor them to your needs. You can create your own categories.

This is what we use to track our budget.

I like it because my husband and I can input the information right after the purchase using the Sheets app on our phone, and it will sync.


This budgeting app is created by Dave Ramsey and is based on the zero-based budgeting method.

The free version will require you to manually enter your income and expenses.

The paid version will allow you to sync your bank accounts, and it will automatically track the expenses for you.


coins stacked next to one another

Budgeting is a valuable tool, but it can also be time-consuming and stressful.

Suppose you overcome the disadvantages of budgeting and find the right way to budget. 

The type of budgeting system you use will suit your personality and your lifestyle!

In that case, budgeting will save you money and increase your net worth.

Imagine finding the right way to budget so that you spend less time worrying about money management.   

Imagine your money working smarter with less effort because of how you budget.   

We are Team” Pay Yourself First” in our household. Do I still worry about our budget?

Yes…but I’m a budgeter! I can’t really live life outside of our budget without feeling uneasy. 

Budgeting takes some effort, but it doesn’t need to be hard or complicated.  

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